Chapter 19: International Trade

Suppose that a small island nation, Runau, had the imports and exports shown in the table for 2014 and 2015. By how much did its trade deficit change?

-5 millions dollars

The figure shows the 2014 export and import totals (in billions of dollars) for trade between the United States and selected other nations. Calculate the U.S. trade balance with Mexico. For a surplus, enter a positive number; for a deficit, enter a negative number.

-54 billions dollars

Which of these statements regarding U.S. trade are true?

Correct Answer(s): The majority of U.S. goods imports come from fewer than ten nations. The U.S. has an overall trade deficit. Incorrrect Answer: All U.S. trading partners contribute roughly the same amount to U.S. imports. The United States has a trade deficit with every single nation it trades with. The largest U.S. trading partner in terms of goods imports is also its largest trading partner in terms of goods exports.

Which of these are reasons for the intense increase in international trade that has occurred over the last 70 years?

Correct Answer(s): reduced trade barriers increased specialization among nations lower shipping costs Incorrect Answer: higher tariffs increased use of quotas

To grow its way out of poverty, Nicaragua has established "free zones" where companies can produce goods for

export domestic apparel workers consumers

From the graphs, it is evident that the United States imports about 50% more in

goods services five times twice

Between 1970 and 2013, world merchandise trade

increased tenfold no rose to 25%

A quota, like a tariff, has the effect of

limiting no quotas tariffs

Since at least 1975, the United States has had a

negative trade deficit services goods

Trade barriers protect domesti

producers competition consumers consumers a special interest group

Both tariffs and quotas tend to

reduce prices consumption poor

The figure below depicts the impact of a quota in the market for tablet computers. Assume that a nation initially participates in free trade and enjoys a world price of PW = $160 per pair of tablet computer, but then an import quota equal to 5,000 - 3,000 = 2,000 is imposed, consequently reducing the welfare of domestic consumers by the total of areas A, B, PS, and F, which comes to $330,000. How much of that domestic consumer welfare will be captured by domestic producers?

150,000

The United States signed the North American Free Trade Agreement, or NAFTA, in

1992 trade restrictions Canada more than doubled

Currently, the United States has free trade agreements in force with how many nations?

20

The graph below depicts the impact of a tariff in the market for shoes. If a nation initially participates in free trade and enjoys a price of $100 per pair of shoes, then a 20% shoe tariff would reduce the welfare of domestic consumers by the total of areas A, B, PS, and T.Of these areas representing a loss to domestic consumers, click on the area(s) that do not represent a gain to any other group.

A & B

Drag each nation to its correct position in the graph, to show the total value of U.S. goods exported to and imported from that nation in 2014.

CANADA 312 & 348 JAPAN 67 & 134 CHINA 124 & 467 UNITED KINGDOM 54

Which items represent the United States's main service exports?

Main Service Exports: travel services educational services financial services Not Main Service Exports: legal services construction services

If the United States imposes new tariffs on foreign car imports, domestic manufacturers will sell more cars.

True

atch each good to its status in U.S. trade with Canada and Mexico

a major export to Mexico (meat) a major export to Canada (Correct label: agricultural products) a major import from Mexico (gold) a major import from Canada (natural gas)

If Mexico and the United States faced these opportunity cost, then to benefit from trade Mexico should specialize in producing

sugar the unites states Mexico 3

The tiny isolationist nations of Lorland and Zhangia are considering opening their borders to trade with each other. Both nations produce only two goods: smoothies and sandals. Currently, a worker in Lorland can produce 2 smoothies per day or 8 sandals per day, while a worker in Zhangia can produce 1 smoothie per day or 5 sandals per day. Using this information, please match each nation and good to the most accurate description

the nation that will specialize in producing sandals once trading begins (Zhangia) the good that Lorland will import from Zhangia after trading begins (sandals) the good that Lorland will export to Zhangia after trading begins (smoothies) the nation that will specialize in producing smoothies once trading begins (Lorland)

Suppose Mexico's opportunity cost for producing 1 unit of food is 3 units of clothing and the United States' opportunity cost for producing 1 unit of food is 0.5 units of clothing. Trade at a ratio of 1:1 is beneficial to both countries. How beneficial would it be for Mexico if the trading ratio were 1 unit of clothing for every 2 units of food?

this is better than 1.1

One argument for trade barriers is that domestic industries sometimes need trade protection

while they political remove establish